Tuesday, 21 July 2015

ASX 200 testing lower end of resistance zone, look for turn lower

Daily chart shows the ASX 200 testing the lower end of a 100 point resistance zone. Look for a turn lower from nearby current levels. Why? Longer term charts show that a lasting top may be in place, with a large decline taking its first baby steps.

Weekly chart shows that the ASX 200 recently completed 5 waves up from the 2011 low. It would be surprising if a complete 5 waves up that lasted 3.5 years could be fully corrected in just 2 months, so I expect the decline will last longer and carry deeper. Key trend line support must be broken in coming months to prove this wave count. It is possible that the illustrated wave 5 is merely wave 1 of an extended 5th, but that bullish scenario has low odds while the market remains below the top of the daily chart resistance zone.

Monthly chart shows that if the five waves from the 2011 low are in fact complete, then the entire bear market rally from the 2009 low also counts as complete, and the market will next trend lower to below the 2009 low. Let's see.

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